Exercise 19-22 Income (Loss) Tax Rate Pretax financial income (loss) and taxable
ID: 2618587 • Letter: E
Question
Exercise 19-22
Income (Loss)
Tax Rate
Pretax financial income (loss) and taxable income (loss) were the same for all years since Skysong has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized.
With calculations / explanations pleasen
Skysong Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2009 through 2017 as follows:Income (Loss)
Tax Rate
2009 $34,220 30% 2010 47,200 30% 2011 20,060 35% 2012 56,640 50% 2013 (177,000) 40% 2014 106,200 40% 2015 35,400 40% 2016 123,900 40% 2017 (70,800) 45%
Pretax financial income (loss) and taxable income (loss) were the same for all years since Skysong has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized.
Explanation / Answer
In year 2013
Income Tax Refund Receivable = [($20,060 x 35%) + ($56,640 x 50%)] = 35341
Benefit Due to Loss Carryforward = ($177,000 – $20,060 – $56,640 = $100,300) ; ($100,300 x 40%) = 40120
In year 2014
Income Tax Payable = [40% x ($106,200 – $100,300)] = $2,360
For year 2017
Income Tax Refund Receivable = [($35,400 x 40%) + ($35,400 x 40%)] = $28,320
Account Titles and Explanation Debit Credit Income Tax Expense 42480 Deferred Tax 40120 Income tax payable 2360Related Questions
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